Financial Aid 101:Financial Aid 101:An OverviewAn Overview

Alex MuroAlex MuroAssistant Director Assistant Director

Student Financial ServicesStudent Financial ServicesYale UniversityYale University

The Forms You Need to KnowThe Forms You Need to Know

• FAFSA (Free Application for Federal Student FAFSA (Free Application for Federal Student Aid)Aid)– Required by Required by allall colleges and universities colleges and universities– FreeFree– www.fafsa.ed.govwww.fafsa.ed.gov– Available January 1, 2009 for 2009/2010Available January 1, 2009 for 2009/2010– Apply for PIN now!Apply for PIN now!

Financial Aid 101:Financial Aid 101:An OverviewAn Overview

Alex MuroAlex MuroAssistant Director Assistant Director

Student Financial ServicesStudent Financial ServicesYale UniversityYale University

The Forms You Need to Know The Forms You Need to Know (continued)(continued)

• CSS Financial Aid PROFILECSS Financial Aid PROFILE– Required by Required by somesome colleges and universities colleges and universities– $25 for first school and $16 for each additional $25 for first school and $16 for each additional

schoolschool– profileonline.collegeboard.comprofileonline.collegeboard.com– Available October 1, 2008 for 2009/2010Available October 1, 2008 for 2009/2010

• Institutional ApplicationInstitutional Application– Check with each individual schoolCheck with each individual school

• Many require a copy of the prior year’s tax return, e.g Many require a copy of the prior year’s tax return, e.g 2008 for 2009/20102008 for 2009/2010

The Forms You Need to KnowThe Forms You Need to Know

• CSS Financial Aid PROFILECSS Financial Aid PROFILE– Required by Required by somesome colleges and universities colleges and universities– $25 for first school and $16 for each additional $25 for first school and $16 for each additional

schoolschool– profileonline.collegeboard.comprofileonline.collegeboard.com– Available October 1, 2008 for 2009/2010Available October 1, 2008 for 2009/2010

• Institutional ApplicationInstitutional Application– Check with each individual schoolCheck with each individual school

www.collegeboard.comwww.collegeboard.com

• Scholarship SearchScholarship Search

• College Financing CalculatorsCollege Financing Calculators– Expected Family Contribution (EFC)Expected Family Contribution (EFC)

•Federal Methodology (FM)Federal Methodology (FM)

• Institutional Methodology (IM)Institutional Methodology (IM)

• Compare Aid AwardsCompare Aid Awards

““Insider” TipsInsider” Tips• Comply with deadlinesComply with deadlines

– Checklist for each schoolChecklist for each school– Copies of all submitted formsCopies of all submitted forms– Not only the first year but every year!Not only the first year but every year!

• Estimate when necessaryEstimate when necessary

• Ask questionsAsk questions

• Focus on net price, not sticker priceFocus on net price, not sticker price

• Review all available financing Review all available financing optionsoptions

““Insider” Tips (continued)Insider” Tips (continued)

• Explain special circumstances with Explain special circumstances with initial applicationinitial application

• Notify financial aid office of any Notify financial aid office of any significant changes in income and significant changes in income and assets as soon as possibleassets as soon as possible

Vocabulary Vocabulary

• COA = Cost of AttendanceCOA = Cost of Attendance– Direct expenses (tuition, room, board, fees) + Direct expenses (tuition, room, board, fees) +

indirect expenses (books, supplies, indirect expenses (books, supplies, transportation, personal expenses)transportation, personal expenses)

• EFC = Expected Family ContributionEFC = Expected Family Contribution– What a family is expected to contribute toward What a family is expected to contribute toward

the COAthe COA– NotNot same as what will be paid to school same as what will be paid to school

• Financial Need = COA minus EFCFinancial Need = COA minus EFC

Vocabulary (continued)Vocabulary (continued)

• Need-based aidNeed-based aid• Non need-based aidNon need-based aid

– Awarded on basis of student’s ability or Awarded on basis of student’s ability or talent or ethnic heritagetalent or ethnic heritage

• Meeting full needMeeting full need• GappingGapping• Need-aware admissions policyNeed-aware admissions policy• Need-blind admissions policyNeed-blind admissions policy

What is financial aid?What is financial aid?

• Grants or scholarships (federal, state Grants or scholarships (federal, state or other agency/organization)or other agency/organization)– Money that does not need to be repaidMoney that does not need to be repaid

• Loans (federal or private)Loans (federal or private)– Money that must be repaidMoney that must be repaid– Borrowed by student, parent or bothBorrowed by student, parent or both

What is financial aid?What is financial aid?

• Tuition benefitsTuition benefits– Usually from employerUsually from employer– Considered a resource and therefore may Considered a resource and therefore may

affect other elements of financial aid affect other elements of financial aid awardaward

• WorkWork– Money which the student is expected to Money which the student is expected to

earn and contribute to the cost of earn and contribute to the cost of attendanceattendance

IncomeIncome

• Taxed incomeTaxed income– In general, Adjusted Gross IncomeIn general, Adjusted Gross Income

• Untaxed incomeUntaxed income– Most common sources include Most common sources include

contributions to retirement plans and contributions to retirement plans and child support receivedchild support received

AssetsAssets

• CashCash

• SavingsSavings

• CheckingChecking• Investments – Investments – not including retirement plansnot including retirement plans

• Home equity – Home equity – forfor institutional aid onlyinstitutional aid only

• Other real estateOther real estate

• College savings plansCollege savings plans

How Do I Pay My EFC?How Do I Pay My EFC?

• Past IncomePast Income– SavingsSavings

• Present IncomePresent Income– SalarySalary– Payment PlansPayment Plans

• Future IncomeFuture Income– LoansLoans

Benefits of SavingBenefits of Saving

• More options, i.e. cost is not as More options, i.e. cost is not as important a factorimportant a factor

• Reduces or eliminates the need to Reduces or eliminates the need to borrowborrow

• Spreading the cost of college over Spreading the cost of college over time minimizes the impact on your time minimizes the impact on your lifestyle during the years you pay for lifestyle during the years you pay for collegecollege

Benefits of Saving Benefits of Saving (continued)(continued)

• Minimal impact to financial aid need Minimal impact to financial aid need analysis – contribution from assets:analysis – contribution from assets:– Parents – approximately 5%Parents – approximately 5%– Student – approximately 20%Student – approximately 20%

Federal GrantsFederal Grants

• Pell GrantPell Grant– $4731 maximum for 2008/2009$4731 maximum for 2008/2009

• Supplemental Educational Supplemental Educational Opportunity Grant (SEOG)Opportunity Grant (SEOG)– Pell eligiblePell eligible– $4000 maximum for 2008/2009$4000 maximum for 2008/2009– Amount and recipients determined by Amount and recipients determined by

schoolschool

Federal Grants (continued)Federal Grants (continued)• Academic Competitiveness Grant (ACG)Academic Competitiveness Grant (ACG)

– Pell eligiblePell eligible– $750 for first year student$750 for first year student– $1300 for second year$1300 for second year– Rigorous high school program of studyRigorous high school program of study– 3.0 GPA for second year3.0 GPA for second year

• National Science and Mathematics Access National Science and Mathematics Access to Retain Talent (SMART) Grantto Retain Talent (SMART) Grant– Pell eligiblePell eligible– $4000 for each of third and fourth years$4000 for each of third and fourth years– Eligible majorEligible major– 3.0 GPA3.0 GPA

Federal Grants (continued)Federal Grants (continued)• Teacher Education for Assistance for Teacher Education for Assistance for

College and Higher Education College and Higher Education (TEACH) Grant(TEACH) Grant– $4000 maximum for 2008/2009$4000 maximum for 2008/2009– 3.25 GPA or qualifying score on 3.25 GPA or qualifying score on

admissions testadmissions test– Agree to teach in low income school in Agree to teach in low income school in

specific subject after graduationspecific subject after graduation

LoansLoans

• FederalFederal– Stafford for student borrowersStafford for student borrowers– Parent PLUS for parent borrowersParent PLUS for parent borrowers

• PrivatePrivate

Federal Stafford LoanFederal Stafford Loan

• Fixed interest rate of 6.8%*Fixed interest rate of 6.8%*• No credit check requiredNo credit check required• No payments required while student No payments required while student

is enrolled at least half-time (in-is enrolled at least half-time (in-school deferment) and for 6 months school deferment) and for 6 months after graduation (grace period)after graduation (grace period)

• Different repayment, deferment, and Different repayment, deferment, and forbearance optionsforbearance options

Federal Stafford Loan Federal Stafford Loan (continued)(continued)

• Subsidized: need-basedSubsidized: need-based– Federal government pays interest on Federal government pays interest on

loan while student is in school and loan while student is in school and during grace periodduring grace period

• Unsubsidized: not need-basedUnsubsidized: not need-based– Student must make interest-only Student must make interest-only

payments while in school and during payments while in school and during grace period to avoid capitalizationgrace period to avoid capitalization

Annual Loan Limits – Federal Stafford Annual Loan Limits – Federal Stafford LoanLoan

Base Loan Base Loan Amount Amount

(Subsidized and (Subsidized and Unsubsidized)Unsubsidized)

Additional Additional UnsubsidizeUnsubsidize

d Loan d Loan AmountAmount

Total Loan Total Loan AmountAmount

First-Year First-Year Undergraduate Undergraduate

(Freshman)(Freshman)$3,500$3,500 $2,000$2,000 $5,500$5,500

Second-Year Second-Year Undergraduate Undergraduate (Sophomore)(Sophomore)

$4,500$4,500 $2,000$2,000 $6,500$6,500

Third- and Third- and Fourth-Year Fourth-Year

Undergraduate Undergraduate (Junior and (Junior and

Senior)Senior)

$5,500$5,500 $2,000$2,000 $7,500$7,500

Dependent Student without PLUS Denial

Federal Parent PLUS LoanFederal Parent PLUS Loan

• Fixed interest rate of 8.5%Fixed interest rate of 8.5%• Credit check requiredCredit check required

– No debts more than 90 days past dueNo debts more than 90 days past due– No bankruptcy, foreclosure or similar No bankruptcy, foreclosure or similar

action within the past 5 yearsaction within the past 5 years

• Repayment terms same as Repayment terms same as unsubsidized Stafford loan if in-unsubsidized Stafford loan if in-school deferment requestedschool deferment requested

Federal Parent PLUS Loan Federal Parent PLUS Loan (continued)(continued)

• Not available to parents of Not available to parents of independent studentsindependent students

• Annual loan limit = cost of Annual loan limit = cost of attendance minus other aidattendance minus other aid

Private LoansPrivate Loans

• Interest rates usually variable but Interest rates usually variable but sometimes cappedsometimes capped

• Credit check requiredCredit check required

• Repayment terms usually same as Repayment terms usually same as unsubsidized Stafford loanunsubsidized Stafford loan

• Consider state nonprofit lendersConsider state nonprofit lenders– CT Student Loan Foundation (CSLF)CT Student Loan Foundation (CSLF)– CT Higher Education Supplemental Loan CT Higher Education Supplemental Loan

Authority (CHESLA)Authority (CHESLA)

ResourcesResources

•US Department of EducationUS Department of Education

studentaid.ed.govstudentaid.ed.gov

•College BoardCollege Board

www.collegeboard.comwww.collegeboard.com

•FinAid Guide to Financial AidFinAid Guide to Financial Aid

www.finaid.orgwww.finaid.org

Resources (continued)Resources (continued)

•High schoolHigh school

•College or university to which College or university to which student is applyingstudent is applying

•Beware of scams!Beware of scams!– Most, if not all, information that you Most, if not all, information that you

may need is available for free!may need is available for free!

My Contact InformationMy Contact Information

Alex MuroAlex Muro

Email Email alexander.muro@yale.edualexander.muro@yale.edu

Phone Phone 203-436-4068203-436-4068